American idiom meaning payment is required up front in cash (See pay on the nail for a British equivalent). It is most likely derived from the nineteenth century, where shops would use barrels as payment counters (Or taverns might use barrels as tables). Consumers paying the shop owner would place their money on the top of the barrel. The implication is that no credit will be extended.

The Louvin Brothers song, Cash on the Barrelhead, recorded in 1956, went to #7 on the Billboard country charts. Notable covers include those by Gram Parsons, Leftover Salmon, and Dolly Parton.

Sources:
Braham, Carol and Richard Goodman et. al. "The Mavens' Word of the Day." Words@Random. 3 December 1998. <http://www.randomhouse.com/wotd/index.pperl?date=19981203> (16 July 2002)
Karlson, Stephen H. "Re: Did You Know?" <bit.listserv.words-l>. 28 April 1993.
Vinopal, David. "The Louvin Brothers." Alabama Music Hall of Fame. <http://www.alamhof.org/louvin.htm> (16 July 2002.)

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